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please a and b!! Colt Manufacturing has two divisions: 1) pistols; and 2) rifles. Betas for the two divisions have been determined to be beta
please a and b!!
Colt Manufacturing has two divisions: 1) pistols; and 2) rifles. Betas for the two divisions have been determined to be beta (pistol) = 0.4 and beta (rifle) = 0.5. The current risk-free rate of return is 3%, and the expected market rate of return is 9%. The after-tax cost of debt for Colt is 6.5%. The pistol division's financial proportions are 37.5% debt and 62.5% equity, and the rifle division's are 47.5% debt and 52.5% equity. a. What is the pistol division's WACC? b. What is the rifle division's WACC? a. What is the pistol division's WACC? 12.48 % (Round to two decimal places.) b. What is the rifle division's WACC? 3.375 % (Round to two decimal places.)Step by Step Solution
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